8x8 2014 Annual Report Download - page 71

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4. COMMITMENTS AND CONTINGENCIES
Guarantees
Indemnifications
In the normal course of business, the Company may agree to indemnify other parties, including customers, lessors and parties to other
transactions with the Company, with respect to certain matters such as breaches of representations or covenants or intellectual property
infringement or other claims made by third parties. These agreements may limit the time within which an indemnification claim can be made and
the amount of the claim. In addition, the Company has entered into indemnification agreements with its officers and directors.
It is not possible to determine the maximum potential amount of the Company's exposure under these indemnification agreements due to the
limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically,
payments made by the Company under these agreements have not had a material impact on the Company's operating results, financial position or
cash flows. Under some of these agreements, however, the Company's potential indemnification liability might not have a contractual limit.
Product Warranties
The Company accrues for the estimated costs that may be incurred under its product warranties upon revenue recognition. Changes in the
Company's product warranty liability, which is included in cost of product revenues in the consolidated statements of income were as follows (in
thousands):
Leases
The Company leases its headquarters facility in San Jose, California under an operating lease agreement that expires in October 2019. The lease
is an industrial net lease with monthly base rent of $130,821 for the first 15 months with a 3% increase each year thereafter, and requires us to
pay property taxes, utilities and normal maintenance costs.
The Company leases its UK headquarters in Aylesbury UK under an operating lease agreement that expires in March 2017, with a break clause
in March 2015 exercisable with six months' notice. The lease has a base monthly rent of $10,700 until March 2015, rising to $11,522 thereafter,
and requires us to pay property taxes, service charges, utilities and normal maintenance costs.
At March 31, 2014, future minimum annual lease payments under non-cancelable operating leases were as follows (in thousands):
Rent expense for the years ended March 31, 2014, 2013 and 2012 was $1,506,000, $1,195,000, and $746,000, respectively.
66
Years Ended March 31,
2014
2013
2012
Balance at beginning of year
$
452
$
387
$
362
Accruals for warranties
953
611
496
Payments
(745)
(546)
(471)
Balance at end of year
$
660
$
452
$
387
Year Ending March 31,
2015
$
1,745
2016
1,803
2017
1,853
2018
1,789
2019 and Thereafter
2,936
Total
$
10,126